Auditor-General's overview

On 30 May 2012, I announced that my Office would carry out an inquiry into the decision by the former Associate Minister of Immigration, Hon Shane Jones, to grant citizenship to Mr Yang Liu (also known as Yong Ming Yan). I appointed Francis Cooke QC to lead the inquiry on my behalf.

Although this inquiry arose because of concerns about the way an individual application had been handled, those concerns raised questions about whether aspects of the system for considering applications for citizenship were strong enough. Put bluntly, the underlying question was whether the system included enough protection against the risk of corruption.

That risk always exists when an individual decision-maker has a broad discretion to make decisions affecting individual rights and interests. Supporting administrative systems should be designed to minimise that risk but cannot remove it entirely. All those involved, whether they are advisers, decision-makers, or advocates, carry personal responsibility for ensuring that the system operates with integrity.

An unfortunate combination of circumstances, but no evidence of corruption

We found no evidence that there was any improper motive, collusion, or political interference in the decision to authorise citizenship for Mr Liu. However, the combination of unusual circumstances and decisions associated with this case meant that it was not surprising that questions started to be asked. We found reason to criticise most of those involved in different aspects of the decision-making process. In the public sector, decisions not only have to be right, they have to be seen to be right.

How the perception of improper influence arose

Minister of Internal Affairs

Mr Liu had connections with senior politicians, including the then Minister of Internal Affairs, Hon Rick Barker. The Minister of Internal Affairs normally makes decisions on citizenship applications. Although Mr Barker took steps to set up a formal transfer of responsibilities for applications from people he knew, this transfer was not in place when a letter arrived from Mr Liu's lawyers asking about Mr Liu's application.

The Department of Internal Affairs (the Department) provided a draft response for the Minister to sign. It was in the standard form for procedural correspondence of this kind, which included an apparently personal assurance from the Minister that he would ask officials to encourage government agencies to take steps to speed up the processing of Mr Liu's application and that the application would be forwarded to Mr Barker for a decision. Mr Barker signed the letter, even though he had no intention of involving himself in the decision about Mr Liu's application.

Mr Barker acted properly in deciding that he could not make the citizenship decision for Mr Liu, but we do not consider it was wise for him to have signed the letter – at least in that form. We appreciate that the letter was one of many pieces of correspondence that a Minister has to deal with in the course of a busy week, and that it related to procedure rather than any substantive decision. Nonetheless, it created an impression that Mr Barker would be taking a personal interest in Mr Liu's file.

Mr Barker would have been better either to amend the letter to make clear that he would not be personally involved in the file or to arrange for someone else to sign the letter.

Mr Barker had no other involvement with Mr Liu's file. The Prime Minister later approved a standing transfer to give the Associate Minister of Immigration (Mr Jones) responsibility for ministerial decisions on citizenship files where Mr Barker had some personal connection.

Department officials

In the months that followed, Department officials decided not to continue with some investigatory steps and to prioritise Mr Liu's file. We looked at when, how, and why those decisions were made.

Officials were aware that Mr Liu's application had attracted high-profile support from several members of Parliament. Supporting constituents and others as they interact with public entities is a normal part of the work of a member of Parliament. We found no evidence that any politicians attempted to interfere or apply pressure in any unusual or inappropriate way in the decisions that Department officials made about the management of Mr Liu's file.

Officials were under pressure to deal with Mr Liu's application urgently, but this was largely because of repeated requests from Mr Liu's lawyers and from Mr Liu. The decision not to continue with some standard investigatory steps was made because these matters had already been investigated by another unit and Mr Liu wanted the file put to the Minister for decision in its current form, despite the unresolved issues.

The Department provided Mr Jones with a formal submission on the application and recommended that it be declined. The Minister chose not to follow this advice. In our view, the information and advice that the Department gave Mr Jones about Mr Liu's application was inadequate.

Mr Liu's application was the first and only citizenship application that Mr Jones decided. It was also a particularly difficult and complex application that involved confidential material from other agencies. Despite these obvious risks, Mr Jones was never given a formal briefing from a senior official on the requirements of the Citizenship Act 1977 or of relevant departmental policies.

The briefings that Mr Jones did receive about Mr Liu's file were provided by officials with no previous experience of briefing a Minister. Officials omitted important information from the submission they prepared for the Minister. In particular, although Mr Jones was told about ongoing investigations by Immigration New Zealand and the New Zealand Police, he was not told that the Minister of Immigration's earlier decision not to revoke Mr Liu's permanent residency was not a final decision; the Minister of Immigration had specifically directed that investigation of Mr Liu should continue and that the Minister had not ruled out the possibility of revoking Mr Liu's permanent residency in the future.

As a result, when Mr Jones made his decision, he did so without having all the important information. Nor did he fully understand the factors that were legally relevant to the decision or the effect his decision would have on the ongoing immigration investigation.

Associate Minister of Immigration

Mr Jones' understanding of the advice he was given when he was briefed on Mr Liu's application was that Mr Liu might have to return to China to resolve the outstanding issues concerning his citizenship application, and that there were risks to his safety if he did.

Mr Jones had significant concerns about the advice he was given, but did not take steps to clarify that advice with other officials. He also knew that both the New Zealand Police and Immigration New Zealand were still actively investigating Mr Liu, but did not consult those agencies before making his decision. In keeping with his usual approach for ministerial decisions, he wanted to make a final decision quickly.

Mr Jones authorised granting citizenship to Mr Liu, effectively under section 9(1)(c) of the Citizenship Act. This provision gives Ministers a broad discretion to approve an application if there are exceptional circumstances that make it in the public interest, such as humanitarian concerns. He did not record the reasons for his decision, and Mr Liu's advisers were notified of his decision before the Department was notifed. This effectively deprived officials of an opportunity they might otherwise have had to correct the misunderstandings on which Mr Jones' decision was based.

The next day, Mr Jones annotated a letter from Mr Samuels in which Mr Samuels asked for consent to officiate at Mr Liu's citizenship ceremony. Department officials understood the annotation to be approval for a private ceremony and then gave approval for the ceremony to be held urgently. Mr Jones did not appreciate that the Act required him to approve a private ceremony or that the application did not satisfy the normal criteria for urgency.

Potential weaknesses in the way individual submissions are handled

We recognise that the circumstances leading to the decision to grant Mr Liu citizenship were unusual, and may have involved a unique combination of events. Mr Liu's file was complex and presented issues that were challenging both for officials and for the Minister. It was also one of a relatively small sub-set of applications that are presented to the Minister by way of individual submission. We found nothing to suggest that the Department's systems to support most citizenship decisions do not operate satisfactorily.

Nonetheless, this case has exposed potential weaknesses in the way that submissions to the Minister are handled – particularly where the applicant is supported by individuals who may have, or be seen to have, the ability to influence the Minister's decision.

Ministers have a mix of roles as politicians, members of Parliament, and Ministers of the Crown. It is inevitable that they have a wide range of interests and contacts. They are regularly approached by individuals, business interests, lobby groups, and parliamentary colleagues on a wide range of issues. This spread of interests and contacts means that there is a constant risk that they will be perceived as having made decisions on how to use government power or resources for improper reasons. All those involved in the decision-making process, including advocates, need to be aware of this risk.

The usual approach to managing this risk is for Ministers to confine themselves to matters of broad direction and policy and leave officials to make decisions that affect individual rights and interests. However, that is not always possible or appropriate. Decisions about citizenship are so closely related to core aspects of sovereignty that the law has always given Ministers the power to decide who can become a New Zealander.

Although there is an administrative system that enables straightforward applications to be dealt with efficiently, the law still gives Ministers a reasonable measure of personal discretion. In particular, the Minister makes the final judgements on whether applicants have satisfied him or her that they are of good character, or that there are exceptional circumstances that make it in the public interest to grant them citizenship anyway. New Zealand citizenship is highly prized; it is inevitable that people will attempt to influence a Minister to make a favourable decision.

In our view, this amount of personal discretion at the ministerial level requires strong supporting systems and processes to manage the risk that Ministers will make, or will be seen to have made, a decision for reasons unrelated to the merits of the case. When they make citizenship decisions, Ministers are acting in their capacity as agents of the Crown and are applying statutory criteria. However, because of the other roles they are called on to play, there is an inevitable risk that they will be seen to be motivated by political or personal interests. Therefore, the systems supporting the decision-making process need to:

provide support to ensure that those judgements are being made for appropriate reasons; and

demonstrate that the decision has not been made for inappropriate reasons, so that the decision can be defended if it is questioned.

Supporting good decision-making

In our view, the Department could do more to support Ministers to make appropriate decisions about difficult cases. It is the role of officials to ensure that Ministers are properly briefed. This means ensuring that Ministers have clear advice on the legal constraints governing the decision (statutory criteria, the scope of discretion, and any relevant and irrelevant factors) and that all relevant information is drawn to their attention. Officials must also be ready to escalate a matter internally if communication with a Minister is not going well, so that senior staff can take steps to ensure that the Minister understands the information and advice being provided.

The Liu file required Mr Jones to address a difficult issue – one that had troubled other Ministers before him. That is, how should the Minister determine whether the "good character" requirement in the Citizenship Act is met when there are allegations of criminal conduct but no formal finding of wrongdoing or clear evidence.

For Mr Liu, that question was further complicated because the Department was not able to put to him all of the allegations made against him because of confidentiality concerns. Mr Jones had concerns, from a natural justice perspective, about making an adverse decision based on information that Mr Liu had not seen.

There are no easy answers to these issues and the Act undoubtedly requires the Minister to make some difficult judgement calls. In such cases, it is particularly important that Ministers have a good understanding of the requirements of the Citizenship Act and of the relevant facts, and that they are able to demonstrate a clear basis for the judgements they make.

Protecting decisions against challenge

In the public sector, decisions not only have to be right but have to be seen to be so. In this type of decision-making environment, the systems and papers also need to able to rebut allegations of improper decision-making. Simple steps that can be taken include:

ensuring that all interactions with applicants or their advocates are recorded in file notes;

having a standard practice of the Minister having another person present if they meet with an applicant; and

designing the standard form for briefings and decisions to make it easy for the Minister to record the statutory basis and reasons for the decision.

In our view, there is scope to strengthen the current procedures to provide more active support for Ministers making individual citizenship decisions. We have made several recommendations to help the Department strengthen the systems operating within the Department and relevant ministerial offices.

Ministers and their staff also need to recognise the need for care when making decisions of this kind. Procedural developments of the kind we have proposed are not designed to encroach on the right of Ministers to make judgements, but to help them defend the judgements they have made if the judgements are challenged. In our experience, accusations of wrongdoing flourish when there is a lack of information about what actually happened.

Concluding comments

It is beyond the scope of this inquiry to explore these systemic issues and options for change in any detail. Our recommendations are designed to help those involved in the decision-making process to strengthen the system to provide better support and protection for the system and for those involved in it.

I would like to thank all of those individuals who met with us and provided information during this inquiry for their co-operation and openness. This has been a complex inquiry involving many sensitive issues. I appreciate that it has taken us some time to complete this inquiry, which has required patience from the individuals involved. I simply note that it often takes longer to "prove a negative" and reach a conclusion that there is no evidence of wrongdoing than it does to document obvious problems.